Aramco keeps busy mak­ing plans for di­ver­si­fi­ca­tion

▶ Saudi Ara­bia has kept up with re­forms even as oil re­bounds

The National - News - - BUSINESS -

Saudi Aramco is on a roll. The world’s big­gest oil pro­ducer of­fi­cially launched In­ter­na­tional Mar­itime In­dus­tries (IMI) on Fri­day, its lat­est en­try into a new busi­ness as it ac­cel­er­ates ef­forts to seek new sources of rev­enue. As part of those ef­forts, Aramco has been busy strik­ing deals to in­crease its busi­ness in­ter­ests over the past year.

Saudi Ara­bia plans to sell as much as 5 per cent of Aramco in an ini­tial pub­lic of­fer­ing, which is a key part of the king­dom’s Vi­sion 2030, as it vies to di­ver­sify its econ­omy and re­duce its de­pen­dence on oil, in line with Crown Prince Mo­hammed bin Sal­man’s wider re­form plans. The list­ing which is set for 2018, may raise as much as US$100 bil­lion based on a $2 tril­lion val­u­a­tion of the com­pany, mak­ing it the largest of­fer­ing ever glob­ally.

Aramco has been busy strik­ing deals to in­crease its busi­ness in­ter­ests over the past year

Mean­while, Aramco is ex­pand­ing into dif­fer­ent busi­ness lines, like IMI, a marine yard. The 12 mil­lion square-kilo­me­tre marine yard fa­cil­ity an­nounced will have the largest pro­duc­tion ca­pac­ity in the Ara­bian Gulf and will help Aramco and its part­ners re­duce costs, cut down re­sponse time and boost agility when it comes to off­shore drilling and ship­ping ac­tiv­i­ties.

The yard will have an­nual ca­pac­ity to build four off­shore rigs, more than 40 ves­sels in­clud­ing three very large crude car­ri­ers and it will be able to ser­vice over 260 mar­itime prod­ucts. The JV also comes as the king­dom seeks to ra­tio­nalise spend­ing and cre­ate jobs for lo­cal work­force.

Aramco is also ac­cel­er­at­ing plans to boost its In-King­dom To­tal Value Add (IKTVA) Pro­gramme, which was launched in De­cem­ber 2015 with an aim to dou­ble the per­cent­age of lo­cally-pro­duced en­ergy-re­lated goods and ser­vices to 70 per cent by 2021. The pro­gramme also is tar­get­ing ex­port­ing 30 per cent of the to­tal do­mes­tic en­ergy goods and ser­vices pro­duced in the king­dom over the same time frame.

The chal­lenge for the king­dom is to en­sure the non-oil econ­omy ex­pands at sus­tain­able lev­els to help cre­ate jobs for grad­u­ates and keep up with the pace of a fast-grow­ing pop­u­la­tion.

These are im­por­tant steps be­ing taken by Saudi Ara­bia and the coun­try’s lead­er­ship should be lauded for do­ing them even as the price of oil re­bounds.

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